People leave companies and return for many reasons. Some accept another position and later come back. Others leave for personal reasons or return when a new opportunity becomes available.

For Applicable Large Employers (ALEs), rehiring a former employee can raise questions about Affordable Care Act requirements.

Does this person qualify as a new hire? Does their previous full-time status still apply? When must health coverage be offered?

The answers depend on several factors, including how long the worker was away and the method the employer uses to determine full-time status.

Understanding these rules is important for accurate ACA reporting and avoiding potential compliance issues.

When Is a Returning Worker Considered New?

Under Affordable Care Act rules, a worker who returns after a break in service is not automatically treated as a new hire.

Generally, an ALE may treat a returning worker as a new hire if they have not been credited with an hour of service for at least 13 consecutive weeks.

For educational organizations, this period is generally 26 consecutive weeks.

If someone returns before meeting the applicable break-in-service requirement, the company generally must treat them as a continuing employee, unless an exception applies.

This distinction matters because a continuing employee may retain their previous ACA status, including eligibility determined before leaving the company.

The IRS also provides an optional rule, known as the Rule of Parity, that may allow employers to treat certain returning workers as new hires after a break of at least four consecutive weeks, provided the break is longer than their immediately preceding period of employment and meets the other applicable requirements.

Employers should review these requirements before automatically classifying every returning worker as a new hire.

How Rehiring Affects Full-Time Status

For Affordable Care Act purposes, a full-time employee generally works an average of at least 30 hours per week or 130 hours per month.

ALEs can use either the Monthly Measurement Method or the Look-Back Measurement Method to determine full-time status for employer shared responsibility purposes.

Under the Look-Back Measurement Method, a worker’s hours are measured over a defined period to determine their status during a subsequent stability period.

If a continuing employee returns during a stability period in which they were previously determined to be full-time, that status generally remains in effect through the end of the stability period.

For example, consider someone who qualified as full-time, left the company for six weeks, and then returned during the same stability period.

The employer generally cannot start over and classify that person as a new hire simply because there was a break in employment, unless the applicable rehire rules allow it.

Depending on the circumstances, coverage may need to be offered when the worker returns. Under the Look-Back Measurement Method, special timing rules apply to continuing workers who retain full-time status.

Why Employment Dates Matter for ACA Reporting

Accurate employment dates are particularly important when staff leave and return within the same calendar year.

Employers need to know when someone stopped working, when they returned, and how their status and coverage offers changed during those periods.

These details can affect the information reported on Form 1095-C.

For example, a worker may have been offered coverage for several months, left the company, and then returned later in the year.

The employer needs to account for the applicable circumstances for each reporting month rather than treating the entire year as one continuous period with identical coverage information.

Incorrect dates or missing work history can lead to inaccurate filing and potentially costly corrections.

Avoiding Common Rehire Reporting Mistakes

Rehiring an employee can create reporting problems when previous employment data is not readily available.

Some common issues include:

• Treating every returning worker as a new hire without reviewing the applicable break-in-service rules.
• Failing to account for a worker’s previous full-time status.
• Missing changes in coverage offers or eligibility following reemployment.
• Maintaining separate records for someone’s original employment and subsequent rehire without reconciling the data.
• Filing Form 1095-C with incorrect employment or coverage information.

These issues can be especially challenging when payroll, HR, and benefits information is maintained in different systems.

Having access to complete employment history helps employers make more informed decisions when former staff return.

Affordable Care Act Software Helps Manage Status Changes

When people leave and return, maintaining accurate records throughout the year can help prevent problems when it is time to prepare Affordable Care Act forms.

Rather than relying on separate spreadsheets or manually reviewing previous employment records, software can help employers maintain employee data and monitor changes that affect coverage obligations.

Passport Software’s IRS-certified ACA compliance software helps ALEs:

• Maintain employee data, including hiring and termination dates.
• Track status and identify when offers of coverage are needed.
• Monitor coverage offers and contribution amounts.
• Prepare required Forms 1094-C and 1095-C reporting.

For companies managing frequent staff turnover, having access to this information can save time and help reduce the risk of reporting errors.

Passport also offers ACA reporting services, including optional IRS-approved proxy submission for software customers.

Our Full Service option is available for employers who prefer to have the entire process handled for them. Simply provide employee information in a spreadsheet, and we manage the process, including filing on your behalf.

Whether workers are newly hired, returning, or leaving the company, keeping their information current makes Affordable Care Act filing easier to manage.

To learn more about how our ACA software and services can ease the burden of compliance, call 800-969-7900. Or, contact us – we are here to help.